Resolving Tax Problems in San Jose

May 11, 2015 | Blog

High Income Individuals Also Need Tax Help

TaxHelpers is based in the San Francisco Bay Area.  Due to our San Jose location, we represent many high-income professionals, including CEOs, Chief Financial Officers, and other key hi-tech executives.  We also represent a number of doctors, attorneys and investment professionals throughout Santa Clara, San Mateo and San Francisco Counties.

Tax debts of high-income taxpayers are generally caused by the same factors as other tax problems:  job loss, illness, economic decline, and divorce seem to be the most common causes.  However, inadequate tax planning for stock options, bonuses, cash outs, and asset sales further contribute to tax delinquencies in the Silicon Valley.

The typical tax bill ranges from $150K to $800K, and usually involves several years of tax debts.  Generally, if the person is back on their feet, earning a high level of income, they are not going to qualify for a reduction through an offer in compromise and a tax lien will probably be filed.   It becomes a matter of when, and on what terms the tax bill gets paid in order to avoid levies and wage garnishments.

If the taxpayer cannot raise the funds quickly, they are most likely going to need a payment plan with the IRS and Franchise Tax Board.   Since the tax balances are outside the streamline criteria (over $50,000), the taxpayer will need to submit financial information to determine repayment ability.

Extremely high cost of Silicon Valley housing, credit card bills, child support, college and child care costs, as well as financial help to family, often make these taxpayers unable to meet their monthly obligations, stay current with the tax withholdings, and pay significant monthly chunks towards the delinquent tax bill.  Unfortunately, when reviewing the taxpayer’s ability to make payments, the IRS generally does not fully allow these high monthly expenses, thus adding more financial pressure.  Based on the IRS’s allowable standard, the taxpayer is generally allowed only minimum expenses as dictated by the IRS Standards. For example, IRS Collection Standards Housing Allowance for a family of 3 in San Jose is only $3,523.   That includes rent/mortgage and all the utilities.  Anyone who is familiar with Silicon Valley Housing market, can instantly see that the allowance doesn’t even close to San Jose (Santa Clara) rents.

Taxpayers negotiating IRS installment agreement without an attorney, are often asked to commit to extremely high monthly payment. Even the most cooperative IRS agents are not advocates for the taxpayer, and are unlikely go out of their way to reduce the monthly payments below the IRS Guidelines. Although the IRS’ allowable expense guidelines may justify such high payment request, in reality, the taxpayer will not be able to forego their other bills in favor of inflated IRS repayment plans.  An unreasonably high installment agreement is likely to get defaulted in a matter of months, sending the taxpayer back to collections.

TaxHelpers step in to negotiate livable repayment options, that allow the taxpayer to meet their monthly living expenses, while repaying the IRS debt.  Most of the time, all the taxpayer needs is time to restructure their finances.  We can help.

Our job is to help navigate the constantly changing mine field of IRS regulations to help our clients resolve their tax problems with minimum intrusion on their lives.